EU fines Microsoft €561 million for not giving users a browser choice

Microsoft's "technical error" violated antitrust agreement for more than a year.

The browser choice screen displayed to European Union users of Windows.

Peter Bright

European regulators today fined Microsoft €561 million (or $732 million) for failing to offer Windows users a choice of Web browsers as the company had been required to do.

A previous antitrust agreement required Microsoft to present users a choice of Web browsers in addition to its own Internet Explorer, such as Firefox, Chrome, Opera, and Safari. Microsoft did so for most versions of Windows, but an apparent accident caused the browser ballot to be stripped out of Windows 7 when its first service pack was released.

Microsoft admitted to the mistake last year, attributing it to a "technical error." The browser ballot screen was missing on Windows 7 from May 2011 until July 2012, although users could still change their default browser in Windows settings. Microsoft confirmed the mistake and distributed a software fix after EU officials notified the company of reports that users weren't being offered the browser choice.

Today's fine is the first time EU regulators "have punished a company for neglecting to comply with the terms of an antitrust settlement, and it could signal their determination to enforce deals in other cases, including one involving Google, where such an agreement is under discussion," the New York Times said.

Microsoft reiterated today that it accepts responsibility for the violation. "We take full responsibility for the technical error that caused this problem and have apologized for it," Microsoft said. "We provided the Commission with a complete and candid assessment of the situation, and we have taken steps to strengthen our software development and other processes to help avoid this mistake—or anything similar—in the future."

The European Commission announcement of the fine said Microsoft's mistake meant 15 million European users of Windows did not see the browser choice screen.

"In 2009, we closed our investigation about a suspected abuse of dominant position by Microsoft due to the tying of Internet Explorer to Windows by accepting commitments offered by the company," Commission VP Joaquín Almunia said in the announcement. "Legally binding commitments reached in antitrust decisions play a very important role in our enforcement policy because they allow for rapid solutions to competition problems. Of course, such decisions require strict compliance. A failure to comply is a very serious infringement that must be sanctioned accordingly."

The agreement to provide the browser ballot stemmed from Microsoft's dominant position in the Web browser market and the influence it has over users' choice of browsers as the maker of the world's most widely used operating system. Internet Explorer today holds 56 percent of the worldwide desktop browser market share. Microsoft committed to making the browser choice screen available for five years, until December 2014. While admitting the mistake last year, Microsoft offered to extend the time it will offer the browser choice screen by 15 months. The EU announcement today did not say whether it will require Microsoft to do that, and Microsoft declined to comment on the proposed 15-month extension.

The EU described why it believes the choice screen is important and why the fine was necessary:

The choice screen was provided as of March 2010 to European Windows users who have Internet Explorer set as their default web browser. While it was implemented, the choice screen was very successful with users: for example, until November 2010, 84 million browsers were downloaded through it. When the failure to comply was detected and documented in July 2012, the Commission opened an investigation and before taking a decision notified to Microsoft its formal objections in October 2012.

This is the first time that the Commission has had to fine a company for non-compliance with a commitments decision. In the calculation of the fine the Commission took into account the gravity and duration of the infringement, the need to ensure a deterrent effect of the fine and, as a mitigating circumstance, the fact that Microsoft has cooperated with the Commission and provided information which helped the Commission to investigate the matter efficiently.

The EU could have fined Microsoft up to 10 percent of its "total turnover in the preceding business year." Microsoft's fiscal 2012 worldwide revenue was $73.72 billion and its operating income was $21.76 billion. Microsoft's cash reserves total $68 billion.

The Times noted that fines levied by the EU are usually much lower than the maximum allowed. "The largest fine ever levied by the European authorities in an antitrust case was €1.1 billion, or $1.4 billion, in 2009 against Intel for abusing its dominance in the computer chip market," the Times wrote. "Intel is still appealing that ruling."

Microsoft's public statements on the browser ballot error seem to indicate that it will not appeal.

Microsoft implemented the browser ballot screen on Windows 8 for EU users when the latest version of Windows was released last year. Windows RT, the version of Windows 8 for ARM-based tablets and desktops, is more tightly locked down. "Windows RT only allows third-party applications that run in the tightly restricted Metro environment. These restrictions preclude the implementation of high-performance Web browsers," we noted in a story last year. Windows RT is a direct competitor to the iPad, which also places restrictions on third-party browsers.

Microsoft won't be forced open up Windows RT. Last October, Almunia said, “We have looked at Windows RT and on the basis of our investigation so far, there are no grounds to pursue further investigation on this particular issue."

170 Reader Comments

All you people who are like "why did Microsoft get this crap but X, Y and Z didn't?! whah-whah-whah!" need to realize that this isn't about fairness at all. It's about wanting people to have the best and safest online experience. That's what it's really about. By allowing IE to slip easily and silently into nearly every home, web innovation and, by extension, the economy, slips downward. Governments know that IE is the most difficult and frustrating web browser for web developers to code for. Full stop.

I dont think there is anything unfair about the treatment of Microsoft. Sure its easy to download new browsers after fresh Windows installation, but considering Microsoftts dominance on PC markets EU just considered that IE gets unfair advantage. If you have found your way to arstechnica site, you definitely know about computers enough to know how to install different browser and that different browsers exist, but there are lot of people who wouldn't know and EU just looks after these people so that we would have more competition on browser markets.

Lithuania orders Microsoft to put Clippy back into the OS. MS agrees to do it for OSs sold in Lithuania. MS then does a worldwide rollout of a service pack that accidentally deletes old Clippy in Lithuania. Lithuania fines Microsoft a gazillion dollars. This is more about Lithuania needing money to pay for its failed welfare state than anything else.

It's insane to punish Microsoft for bundling a browser with their OS in this day and age. It's not as if they're preventing you from installing a new one or anything.

Microsoft is not being punished for bundling a browser "in this day and age". Microsoft is being punished for their past behavior.

Which was... building a browser in their OS in 2004. When everyone else was doing it. At best, someone could claim they were being punished for bundling a browser between 2000 and 2004, the period before the ruling. But time proved that they were RIGHT in bundling a browser, and that their claims that it was the best thing to do and that every OS would include a browser in the future was right. Yes, they made a mistake in not complying with an agreement, so I understand where the fine comes from, but the ruling is clearly and patently unfair, and time has proven it was. The EU regulators are simply using their power to take money out of a foreign company.

Microsoft didn't get fined because the user didn't get a choice. They got fined, because years ago they accepted a ruling from the EU to give the users a choice in Windows for several years to avoid a monopoly lawsuit (IE had 80% or so marketshare at that point). They then "forgot" to actually give the user a choice, breaking the agreement with the EU and _that's_ what the fine is for.

I certainly don't think anyone with half a wit believes this was any sort of oversight. Even if project leads/influential upstarts/devs with chips on their shoulders disagree with the EU's stance, every relevant party at Microsoft knew non-compliance bore risk. I'm fine with the EU reminding Microsoft "You want to do business here? Comply or be punished." If Microsoft doesn't like the rules of the game, don't play in this territory. Same goes for any company, anywhere. Great.

What I'm not fine with is the assumption that a user base is so inept and thumbless as to not be able to download an alternate browser without a pop-up book and a circle of paper. It's insulting at its core.

Even allowing for the "but it's so cruel and mean, not all of us can develop our alternative browsers effectively for free by being a huge monopoly" arguments, why stop at browsers? Why not sue for notepad, the abortion that has always been WMPlayer, built-in ISO burning, several embedded mail clients over the years (lulz Outlook Express), BitLocker, SnippingTool, literally countless add-ins that one might not deem "strictly necessary" to OS use.

And there's the rub, I believe. All the years we've been witness to MS anti-trust suits, there seems to be a continued implication as to the sense of what should and shouldn't be allowable as "just core to the OS." In my mind, it's very hard to be seen as a bona fide monopoly when there are free versions available, especially some (read: Many) that kick the tar out of anything Microsoft puts closed source, monopoly money into. Anyone know what Winamp is?

It seems to me that the one of the cornerstones of any capitalism is competition. Shouldn't it follow that effort, at least some infinitesimal portion, must be put in by the consumer to achieve what fits her needs best? Even if she's uninitiated? Is she so slighted by having to inform herself that this is cardinally wrong?

Does not including the Hansel & Gretel breadcrumb widget selector really impede one from finding/using another widget to the extent that we should be up in arms when any OS vendor doesn't provide alternative solutions to any included first party software? I'm sure this isn't the last suit of this sort we'll see, but at some point, as IT professionals/gamers/consumers/Luddites, we should all be aware of where this line is being drawn.

TL;DR: Microsoft should be fined for playing games with regulatory bodies, agreed; this is business, not kindergarten. But the logical basis upon which this suit is predicated continues to be offensive to anyone capable of clicking a mouse.

Disclaimer: I've used Opera since 2.0, alongside literally every other mainstream browser (tabs & gestures baby!) I'm moody like that. I probably use Chrome version 3,077 or whatever we're at now, more than most.

I never understood the point of the browser ballot tbh. Wasnt it mainly opera trying to claw back some market share rather than any concern for the end user that made this happen?The whole monopoly thing actually caused more hassle for the end user, having to manually download a browser, moviemaker,live and media player, rather than having them ready to go from the off.There are a few rubbish choices on that ballot that really shouldnt be there, like safari, not updated and riddled with security concerns and maxthon, a cloud based thing that looks dodgy as hell. If someone hasnt got the skills to find and download a browser that best suits their needs id rather they stuck with a default ie install rather than randomly selecting the one with the prettyiest icon (which is what most non computer literate people will do).And why shouldnt microsoft bundle whatever they want with their os?, Apple and Google do. Apple actively cripple or block rival browsers to safari on their devices, which is much worse than anything microsoft did.On windows, theres nothing to stop you installing or developing anything on the system, but Apple deny devs access to key api`s and features as well as artificially restrict what the end user can do, to the detriment of all but Apple. I would call that anti competitive and anti consumer behavior.And before anyone chimes up saying the ballot was a result of a monopoly court order blah blah, i know, its still stupid though.

........What I'm not fine with is the assumption that a user base is so inept and thumbless as to not be able to download an alternate browser without a pop-up book and a circle of paper. It's insulting at its core.........

Have you ever done any kind of tech support? It might be insulting, but it is true.

Between what I've read about Google's and other tech companies' problems... and those faced by the company I work for with VAT and such... it's starting to seem like the only viable business strategy for American companies in Europe is to stay the hell out.

On the other hand over her we hear that only way to do business in US is to have US partner as all the rules and even more court decisions will always go against a foreign company no matter what.

After all Samsung was fined 1 bil for having square phones and few other such details.

Unjust decision in Apple - Samsung case doesn't make Microsoft decision just. Here is about $500 million fine without any crime at all !!!These decisions doesn't cancel each other. they make lawyers and government officials more rich and powerful, and everybody else poorer and powerless (Including Microsoft and Samsung, but mostly users).Internet Explorer is not in monopoly position any more by any stretch of imagination. Just thing now would be to drop this because without IE monopoly this enforcement and fine doesn't make sense at all. If EU cared about browsers it wouldn't wait 1 year without noticing anything. I would in this case fined EU antimonopoly enforcement agency for bad work. Also if anybody really cared about browsers then agreement to restore and prolong screen should be what they cared.

I'm still of the opinion the entire thing is completely ridiculous to force this kind of thing. iOS and Android don't come with forced browser ballots when you first boot up those machines despite iOS' and Android's market dominance in the tablet and phone sectors respectively. It's insane to punish Microsoft for bundling a browser with their OS in this day and age. It's not as if they're preventing you from installing a new one or anything.

You need to remember the context. Earlier in the last decade Microsoft was (almost entirely) a monopoly on desktops and in the browser space. Smart phones weren't really around, Macs were still a very marginal product, Linux was for geeks only... You can't compare the computing space then with now, but just because things have changed doesn't mean that Microsoft can ignore the repercussions of their actions.

A monopoly in the browser space because the average person didn't realize that they could install an alternative? That doesn't sound like very good reasoning to me, especially considering there *was* steady competition at the time, such as Netscape.